Customers Most Satisfied With Online Retail

NEW YORK (AdAge.com) -- One reason e-commerce came out on top in this week's American Consumer Satisfaction Index? Low switching costs.

According to a recent report from University of Michigan and ForeSee Results, which surveys and measures consumers' online satisfaction, satisfaction with e-commerce rose to 81.6 on the index's 100-point satisfaction-rating system, up 2% from 2006, and outperformed all other service industries in customer satisfaction.

Competitive environment
"If you are a monopoly, you don't need to improve. But online, [where company size and location matter less], there are no monopolies and customer satisfaction is essential," Mr. Freed said. "With switch costs [the price it costs a consumer to switch services] being so low, the competition is always only one click away. Bad experiences make it that much easier to get out. Consumers are far more knowledgeable, and less held captive by location or expertise."

He dismissed notions that expectations of customer service on the web are somehow lower than real-world interactions, and therefore might explain the higher scores. "That may have been true before, but no longer. The gap in the different experiences has seriously closed," Mr. Freed said. "With today's technologies, you can see product specs, images you can manipulate, and a much greater range of consumer opinions about your product than you would get from just the [real-world] retail side."

But it's not only about e-services. The success of online brokerage firms such as Fidelity and Charles Schwab have had over E-Trade, which was the only online brokerage firm not to reach 80 points, suggests consumers prefer companies that offer several communication channels: the ability to handle operations online, but with the option to talk to someone real.

A consistent whole
And while a rare few manage an existence without bricks-and-mortar outlets -- such as Amazon -- the secret to creating a more compelling and satisfying customer experience will come from merging channels into a consistent whole.

"You can't have web-only promotions or products, or discrepancies in stock items and prices among outlets, where the customer shows up and the product that was promised on the web is missing from the outlet, or more expensive then advertised," Mr. Freed said. "As mobile devices get better, you will start to see people walk in to stores and web-search a product for customer reviews more frequently. There needs to be more consistency between channels to allow the consumers the flexibility to move between them. Improved satisfaction will improve profits."